P17-3Available-for-sale InvestmentsCardinal Paz Corp. carries an account in its general ledger called Investments which contained debits for investment purchases and no credits with the following descriptions.Feb 1 2010 Sharapova Company common stock $100 par 200 shares$37400April 1U.S. government bonds 11% due April 1 2020 interest payable April 1 and October 1 110 bonds of $1000 par each$110000July 1McGrath company 12% bonds par $50000 dated March 1 2010 purchased at 104 plus accrued interest interest payable annually on March 1 due March 1 2030$54000(Round all computations to the nearest dollar)Prepare entries necessary to classify the amounts into proper accounts assuming that all the securities are classified as available-for-sale.Prepare the entry to record the accrued interest and the amortization of premium on December 31 2010 using the straight-line method.The fair values of the securities on December 31 2010 were:Sharapova Company common stock$31800U.S. government bonds$124700McGrath Company bonds$58600The U.S. government bonds were sold July 1 2011 for $119200 plus accrued interest. Give the proper entry.
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